Investopedia

Continue to Site »

Prepaid Finance Charge

Filed Under »
Dictionary Says

Definition of 'Prepaid Finance Charge'

Charges on a loan agreement which are not included as part of the principal amount being borrowed. Prepaid finance charges can include such things as administration fees, loan insurance and discount points. As these expenses are not a part of the "asking amount," they are considered to be prepaid in nature. These expenses typically must be paid by the borrower at the time of loan closing.
Investopedia Says

Investopedia explains 'Prepaid Finance Charge'

Prepaid finance charges, or closing costs as they are also commonly known, are common in lending agreements, including mortgage borrowing. While not directly incorporated in the cost of borrowing calculation for a loan, these expenses do affect the APR, as upfront fees should be included in the total cost of borrowing statement given to borrowers at loan signing, as is stated in Truth In Lending documentation.

Articles Of Interest

  1.

    How To Read Loan And Credit Card Agreements

    The devil is always in the details! Find out what you're signing yourself up for.

  2. Understanding Your Mortgage

    We walk through the steps needed to secure the best loan to finance the purchase of your home.

  3. Home-Equity Loans: What You Need To Know

    We shed light on why consumers decide to use this form of debt and whether it is a good alternative.

  4. Payday Loans Don't Pay

    Hold too tightly to this rescue line and you'll soon be drowning in debt.

  5. The History Of Consumer Credit Rights

    The Fair Credit Billing Act of 1974 gave consumers the power to dispute credit card charges.

  6. 6 Tips For Selling Your Home Fast

    Find out what you can do to stand out from the competition and make your home an easy sell.

  7. 5 Smart Ways To Use Your Tax Return

    This year, find out how to stretch your tax refund further to strengthen your future.

  8. Common Liabilities That Hurt Your Net Worth

    Every penny that you keep out of the liability side of the net worth equation essentially ends up on the asset side.

  9. The Dangers Of A Reverse Mortgage

    In many circumstances, a reverse mortgage can be a risk to your financial security. Here are six dangers you should consider before signing on the bottom line.

  10. Automatic Cancellation Of PMI When You're Underwater On Your Mortgage

    You might be suprised to learn that after reaching certain criteria, your PMI will be automatically cancelled.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Validation Period

    The amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams and other expenses associated with the issuance of the policy.

  2. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  3. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  4. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  5. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  6. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.
Trading Center